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Asia Hit with More Bad Economic News

The global economic slowdown continues to
take a toll on Asia. New data from China show growth is slowing,
while the South Korean central bank has made an unprecedented
interest rate cut. And things are not likely to improve next
year.

China’s government revenue slumped more
than 3 percent in November – another sign of the weakening
economy.

The Chinese Ministry of Finance said
Thursday that tax cuts, intended to stimulate spending and slumping
demand, caused the fall in tax revenue. It was the third straight
monthly contraction.

The government also says last month’s
inflation rate sank to 2.4 percent, the lowest in nearly two years.
Although consumers might welcome slower price increases, analysts
say the decline indicates weakening demand for consumer goods and
commodities.

In Seoul, the Bank of Korea slashed its
benchmark seven-day repurchase rate by a record 1 percentage point,
to 3 percent. The cut was the fourth in two months and puts the
rate at a historic low.

Lee Seong-tae, the central bank’s
governor says the economy will slow down for some time, because
exports are likely to lose steam as the global slump continues.

He says more cuts are possible, if this
jolt to the financial system does not revive lending and
demand.

Thursday, the Asian Development Bank cut
its forecast for regional growth. It says Asia’s developing
economies are likely to average 6.9 percent growth, this year, and
5.8 percent, next year. The non-profit development lender earlier
had expected growth of 7.5 percent this year and slightly more than
7 percent in 2009.

The ADB says the problem is the rapid
contraction in the American and European markets – cutting demand
for Asian exports.

Lee Jong-Wha is the head of the ADB’s
office of regional economic integration. He unveiled the new
forecasts in Hong Kong and said, although most Asian economies will
not fall as far as the developed markets, the region will not
escape unscathed.

“Our projection is up to now based on the
information, we made a judgment that Asian countries may not get
pneumonia, but still will get a cold,” Lee said. “This much is
pretty sure. Winter is coming and we’ll get a cold.”

He says China and India, which have seen
dramatic growth in the past decade, will see their economies slow.
The ADB says China will expand by about 8.2 percent in 2009. That
is down from 9.5 percent this year, and nearly 11 percent in
2007.

India’s growth is forecast to slow to
about 6.5 percent next year, well below the 9 percent expansion,
last year.

Although those growth rates might draw
envy from many countries in recession, Indian and Chinese leaders
worry about being able to generate jobs for millions of unemployed
workers.

Many governments, around the region, are
looking for with new ways to kick start (invigorate) their
economies. In Thailand, the government has declared January 2 will
be a holiday, in addition to the traditional holidays of December
31 and January 1. Officials hope many Thais will use the long break
to travel and shop, giving a boost to the tourism industry, which
has been hit hard by both the global economic crisis and domestic
political tensions.

Thursday’s flurry of bad news pushed some
Asian stock markets lower. Shanghai’s main index was off more than
2 percent. But the benchmark indexes in Tokyo and Seoul managed to
close up by about three-quarters of a point.